Government Type: Federal republic. Independence: October 1, 1960. Constitution: The 1999 constitution (based largely on the 1979 constitution) was promulgated by decree on May 5, 1999 and came into force on May 29, 1999. Subdivisions: 36 states plus Federal Capital Territory (Abuja); states divided into a total of 774 local government areas. 2009 budget: $21.3 billion, of which recurrent expenditures constitute $11.1 billion, capital expenditures $7 billion, statutory transfers $1.1 billion, and debt service $2 billion. Critical sectors--security and the Niger Delta (20%); education (8%); transportation (7%); agriculture and water (5%); and energy (5%).Indebtedness, including federal/state government debt, as percentage of GDP: 3%.

PEOPLEThe most populous country in Africa, Nigeria accounts for over half of West Africa's population. Although less than 25% of Nigerians are urban dwellers, at least 24 cities have populations of more than 100,000. The variety of customs, languages, and traditions among Nigeria's 250 ethnic groups gives the country a rich diversity. The dominant ethnic group in the northern two-thirds of the country is the Hausa-Fulani, most of whom are Muslim. Other major ethnic groups of the north are the Nupe, Tiv, and Kanuri. The Yoruba people are predominant in the southwest.

About half of the Yorubas are Christian and half Muslim. The predominantly Catholic Igbo are the largest ethnic group in the southeast, with the Efik, Ibibio, and Ijaw comprising a substantial segment of the population in that area. Persons of different language backgrounds most commonly communicate in English, although knowledge of two or more Nigerian languages is widespread. Hausa, Yoruba, Igbo, Fulani, and Kanuri are the most widely used Nigerian languages.

HISTORY In the northern cities of Kano and Katsina, recorded history dates back to about 1000 AD. In the centuries that followed, these Hausa kingdoms and the Bornu empire near Lake Chad prospered as important terminals of north-south trade between North African Berbers and forest people who exchanged slaves, ivory, and kola nuts for salt, glass beads, coral, cloth, weapons, brass rods, and cowrie shells used as currency.

In the southwest, the Yoruba kingdom of Oyo was founded about 1400, and at its height from the 17th to 19th centuries attained a high level of political organization and extended as far as modern Togo. In the south central part of present-day Nigeria, as early as the 15th and 16th centuries, the kingdom of Benin had developed an efficient army; an elaborate ceremonial court; and artisans whose works in ivory, wood, bronze, and brass are prized throughout the world today. In the 17th through 19th centuries, European traders established coastal ports for the increasing traffic in slaves destined for the Americas. Commodity trade, especially in palm oil and timber, replaced slave trade in the 19th century, particularly under anti-slavery actions by the British Navy. In the early 19th century the Fulani leader, Usman dan Fodio, promulgated Islam and that brought most areas in the north under the loose control of an empire centered in Sokoto.

A British Sphere of Influence Following the Napoleonic wars, the British expanded trade with the Nigerian interior. In 1885, British claims to a sphere of influence in that area received international recognition and, in the following year, the Royal Niger Company was chartered. In 1900, the company's territory came under the control of the British Government, which moved to consolidate its hold over the area of modern Nigeria. In 1914, the area was formally united as the "Colony and Protectorate of Nigeria."

Administratively, Nigeria remained divided into the northern and southern provinces and Lagos colony. Western education and the development of a modern economy proceeded more rapidly in the south than in the north, with consequences felt in Nigeria's political life ever since. Following World War II, in response to the growth of Nigerian nationalism and demands for independence, successive constitutions legislated by the British Government moved Nigeria toward self-government on a representative, increasingly federal, basis.

IndependenceNigeria was granted full independence in October 1960, as a federation of three regions (northern, western, and eastern) under a constitution that provided for a parliamentary form of government. Under the constitution, each of the three regions retained a substantial measure of self-government. The federal government was given exclusive powers in defense and security, foreign relations, and commercial and fiscal policies. In October 1963, Nigeria altered its relationship with the United Kingdom by proclaiming itself a federal republic and promulgating a new constitution. A fourth region (the midwest) was established that year. From the outset, Nigeria's ethnic, regional, and religious tensions were magnified by the significant disparities in economic and educational development between the south and the north.

On January 15, 1966, a small group of army officers, mostly southeastern Igbos, overthrew the government and assassinated the federal prime minister and the premiers of the northern and western regions. The federal military government that assumed power was unable to quiet ethnic tensions or produce a constitution acceptable to all sections of the country. Its efforts to abolish the federal structure greatly raised tensions and led to another coup in July. The coup-related massacre of thousands of Igbo in the north prompted hundreds of thousands of them to return to the southeast, where increasingly strong Igbo secessionist sentiment emerged.

In a move that gave greater autonomy to minority ethnic groups, the military divided the four regions into 12 states. The Igbo rejected attempts at constitutional revisions and insisted on full autonomy for the east. Finally, in May 1967, Lt. Col. Emeka Ojukwu, the military governor of the eastern region, who emerged as the leader of increasing Igbo secessionist sentiment, declared the independence of the eastern region as the "Republic of Biafra." The ensuing civil war was bitter and bloody, ending in the defeat of Biafra in 1970.

Following the civil war, reconciliation was rapid and effective, and the country turned to the task of economic development. Foreign exchange earnings and government revenues increased spectacularly with the oil price rises of 1973-74. On July 29, 1975, Gen. Murtala Muhammed and a group of fellow officers staged a bloodless coup, accusing Gen. Yakubu Gowon's military government of delaying the promised return to civilian rule and becoming corrupt and ineffective. General Muhammed replaced thousands of civil servants and announced a timetable for the resumption of civilian rule by October 1, 1979. Muhammed also announced the government's intention to create new states and to construct a new federal capital in the center of the country.

General Muhammed was assassinated on February 13, 1976, in an abortive coup. His chief of staff, Lt. Gen. Olusegun Obasanjo, became head of state. Obasanjo adhered meticulously to the schedule for return to civilian rule, moving to modernize and streamline the armed forces and seeking to use oil revenues to diversify and develop the country's economy. Seven new states were created in 1976, bringing the total to 19. The process of creating additional states continued until, in 1996, there were 36.

The Second Republic A constituent assembly was elected in 1977 to draft a new constitution, which was published September 21, 1978, when the ban on political activity, in effect since the advent of military rule, was lifted. Political parties were formed, and candidates were nominated for president and vice president, the two houses of the National Assembly, governorships, and state houses of assembly. In 1979, five political parties competed in a series of elections in which a northerner, Alhaji Shehu Shagari of the National Party of Nigeria (NPN), was elected president. All five parties won representation in the National Assembly.

In August 1983, Shagari and the NPN were returned to power in a landslide victory, with a majority of seats in the National Assembly and control of 12 state governments. But the elections were marred by violence, and allegations of widespread vote rigging and electoral malfeasance led to legal battles over the results.

On December 31, 1983, the military overthrew the Second Republic. Maj. Gen. Muhammadu Buhari emerged as the leader of the Supreme Military Council (SMC), the country's new ruling body. He charged the civilian government with economic mismanagement, widespread corruption, election fraud, and a general lack of concern for the problems of Nigerians. He also pledged to restore prosperity to Nigeria and to return the government to civilian rule but was stymied in his attempt to deal with Nigeria's severe economic problems. Despite relative popularity for its no-nonsense approach in tackling corruption, the Buhari government was peacefully overthrown by the SMC's third-ranking member, Army Chief of Staff Maj. Gen. Ibrahim Babangida, in August 1985.

Babangida moved to restore freedom of the press and to release political detainees being held without charge. As part of a 15-month economic emergency, he announced stringent pay cuts for the military, police, and civil servants and enacted similar cuts for the private sector. Imports of rice, corn, and wheat were banned. Babangida orchestrated a national debate on proposed economic reform and recovery measures, which reportedly convinced him of intense opposition to an economic recovery package dependent on an International Monetary Fund (IMF) loan.

The Abortive Third Republic In early 1989, a constituent assembly completed work on a constitution for the Third Republic, and political activity again was permitted. In April 1990, mid-level officers tried and failed to overthrow Babangida, and 69 accused coup plotters were later executed after secret trials before military tribunals. In December 1990 the first stage of partisan elections was held at the local government level, followed by gubernatorial and state legislative elections in December 1991; turnout was low but non-violent. However, Babangida canceled primaries scheduled for August and September 1992 due to fraud. All announced candidates were disqualified from again standing for president once a new election format was selected. After delayed promises for elections in 1990, the government finally held a presidential election on June 12, 1993.

In what most observers deemed to be Nigeria's fairest elections, early returns indicated that wealthy Yoruba businessman M.K.O. Abiola had won a decisive victory. But on June 23, Babangida, using several pending lawsuits as a pretense, annulled the election, throwing Nigeria into turmoil. More than 100 persons were killed in riots before Babangida agreed to hand power to an "interim government" on August 27. Babangida then attempted to renege on his decision. Without popular and military support, he was forced to hand over to Ernest Shonekan, a prominent nonpartisan businessman. Shonekan was to rule until new elections, slated for February 1994. Although he had led Babangida's Transitional Council since early 1993, Shonekan was unable to reverse Nigeria's ever-growing economic problems or to defuse lingering political tension.

With the country sliding into chaos, Defense Minister Sani Abacha quickly assumed power and forced Shonekan's "resignation" on November 17, 1993. Abacha dissolved all democratic political institutions and replaced elected governors with military officers. Abacha promised to return the government to civilian rule but refused to announce a timetable. Following the annulment of the June 12 election, the United States and other nations imposed various sanctions on Nigeria, including restrictions on travel by government officials and their families and suspension of arms sales and military assistance. Additional sanctions were imposed as a result of Nigeria's failure to gain full certification for its counter-narcotics efforts.

Although Abacha's takeover was initially welcomed by many Nigerians, disenchantment grew rapidly. Many opposition figures formed the "National Democratic Coalition (NADECO)" to campaign for an immediate return to civilian rule, and most Nigerians boycotted the May 1994 polls for delegates to a government-sponsored Constitutional Conference. On June 11, 1994, using the groundwork laid by NADECO, Abiola declared himself president and went into hiding. He reemerged and was promptly arrested on June 23. A series of strikes by petroleum workers and other unions initially brought economic life in Lagos and the southwest to a standstill, but by mid-August Abacha had dismissed the national union leadership, arrested his opponents, closed media houses, and moved strongly to curb dissent. In early 1995, Abacha alleged that some 40 military officers and civilians were engaged in a coup plot, including former head of state Obasanjo and his deputy, retired Gen. Shehu Musa Yar'Adua. After a secret tribunal, most of the accused were convicted, and several death sentences were handed down. The tribunal also charged, convicted, and sentenced prominent human rights activists, journalists, and others--including relatives of the coup suspects--for their alleged "anti-regime" activities.

In an October 1, 1995 address to the nation, Gen. Sani Abacha announced the timetable for a 3-year transition to civilian rule. Public turnout for his sham local elections in December 1997 and in April 1998 state assembly and gubernatorial elections was under 10%, and public reaction to Abacha's presidential nomination by the five accepted parties was apathy and a near-complete boycott. Widely expected to succeed himself as a civilian president on October 1, 1998, he remained head of state until his death on June 8 of that year. During the Abacha regime, the government continued to enforce its arbitrary authority through the federal security system--the military, the state security service, and the courts. Under Abacha, all branches of the security forces committed serious human rights abuses. Abacha was replaced by General Abdulsalami Abubakar, who subsequently released almost all known civilian political detainees and decreased the number of reported human rights abuses.

Abubakar's Transition to Civilian Rule During both the Abacha and Abubakar eras, Nigeria's main decision-making organ was the exclusively military Provisional Ruling Council (PRC) which governed by decree. The PRC oversaw the 32-member federal executive council composed of civilians and military officers. Pending the promulgation of the constitution written by the constitutional conference in 1995, the government observed some provisions of the 1979 and 1989 constitutions. Neither Abacha nor Abubakar lifted the decree suspending the 1979 constitution, and the 1989 constitution was not implemented. The judiciary's authority and independence was significantly impaired during the Abacha era by the military regime's arrogation of judicial power and prohibition of court review of its action. The court system continued to be hampered by corruption and lack of resources after Abacha's death. In an attempt to alleviate such problems, Abubakar's government implemented a civil service pay raise and other reforms.

In August 1998, the Abubakar government appointed the Independent National Electoral Commission (INEC) to conduct elections for local government councils, state legislatures and governors, the National Assembly, and president. INEC held a series of four successive elections between December 1998 and February 1999. Former military head of state Olusegun Obasanjo, freed from prison by Abubakar, ran as a civilian candidate and won the presidential election. Irregularities marred the vote, and the defeated candidate, Chief Olu Falae, challenged the electoral results and Obasanjo's victory in court.

The PRC promulgated a new constitution, based largely on the suspended 1979 constitution, before the May 29, 1999 inauguration of the new civilian president. The constitution included provisions for a bicameral legislature, the National Assembly, consisting of a 360-member House of Representatives and a 109-member Senate. The executive branch and the office of president retained strong federal powers. The legislature and judiciary, having suffered years of neglect, are finally rebuilding as institutions and beginning to exercise their constitutional roles in the balance of power.

The Obasanjo AdministrationThe emergence of a democratic Nigeria in May 1999 ended 16 years of consecutive military rule. Olusegun Obasanjo became the steward of a country suffering economic stagnation and the deterioration of most of its democratic institutions. Obasanjo, a former general, was admired for his stand against the Abacha dictatorship, his record of returning the federal government to civilian rule in 1979, and his claim to represent all Nigerians regardless of religion.

The new President took over a country that faced many problems, including a dysfunctional bureaucracy, collapsed infrastructure, and a military that wanted a reward for returning quietly to the barracks. The President moved quickly and retired hundreds of military officers who held political positions, established a blue-ribbon panel to investigate human rights violations, ordered the release of scores of persons held without charge, and rescinded a number of questionable licenses and contracts let by the previous military regimes. The government also moved to recover millions of dollars in funds secreted in overseas accounts.

Most civil society leaders and most Nigerians saw a marked improvement in human rights and democratic practice under Obasanjo. The press enjoyed greater freedom than under previous governments. As Nigeria works out representational democracy, there have been conflicts between the executive and legislative branches over major appropriations and other proposed legislation. A sign of federalism has been the growing visibility of state governors and the inherent friction between Abuja and the various state capitols over resource allocation.

In the years following the end of military rule, Nigeria witnessed recurrent incidents of ethno-religious and community conflicts, many of which derived from distorted use of oil revenue wealth, flaws in the 1999 constitution, and age-old disputes over the distribution of land and other resources. In May 1999, violence erupted in Kaduna State over the succession of an Emir, resulting in more than 100 deaths. In November 1999, the army destroyed the town of Odi in Bayelsa State and killed scores of civilians in retaliation for the murder of 12 policemen by a local gang. In Kaduna in February-May 2000 over 1,000 people died in rioting over the introduction of criminal Shar'ia in the state. Hundreds of ethnic Hausa were killed in reprisal attacks in southeastern Nigeria. In September 2001, over 2,000 people were killed in inter-religious rioting in Jos. In October 2001, hundreds were killed and thousands displaced in communal violence that spread across the Middle-Belt states of Benue, Taraba, and Nasarawa. On October 1, 2001, President Obasanjo announced the formation of a National Security Commission to address the issue of communal violence. In 2003, he was re-elected in contentious and highly flawed national elections and state gubernatorial elections, which were litigated over two years. Since 2006, violence, destruction of oil infrastructure, and kidnappings of primarily expatriates in the oil-rich Niger River Delta have intensified as militants demanded a greater share of federal revenue for states in the region, as well as benefits from community development. For many reasons, Nigeria's security services have been unable to respond effectively to the security threat, which is both political and criminal.

In May 2006, the National Assembly soundly defeated an attempt to amend the constitution by supporters of a third presidential term for President Obasanjo. This measure was packaged in a bundle of what were otherwise non-controversial amendments. Nigeria's citizens addressed this issue in a constitutional, democratic, and relatively peaceful process.

Civilian TransitionNigeria held state legislative and gubernatorial elections on April 14 as well as presidential and national legislative elections on April 21, 2007, in which more than 35 political parties participated. Nigeria missed an opportunity to strengthen an element of its democracy through a sound electoral process. Analysis of the process by most international observers did not conform to what Nigeria's National Electoral Commission (INEC) reported. U.S. and international observers reported overall a seriously flawed process with credible reports of malfeasance and vote rigging in some constituencies. The scope of violence that occurred also was regrettable. There were considerable degrees of difference in the conduct of elections among states, but serious differences were also observed within states during the two polling dates. The main opposition parties, All Nigeria People's Party (ANPP) and the Action Congress (AC), as well as numerous smaller political parties and the ruling People's Democratic Party (PDP) filed petitions to challenge the results of gubernatorial elections in 34 of Nigeria's 36 states. The Court of Appeal received 1,527 petitions, a tripling of the 527 petitions filed and received in 2003. INEC's principal problems included politicization and lack of independence, lack of transparency in its operations and decision-making, and persistent failure to make adequate logistical arrangements for both voter registration and polling. With INEC's certification of the ruling party's presidential ticket as the winner with over 70% of the vote, Nigeria experienced its first transition of power between civilian administrations when President Obasanjo stepped down on May 29, 2007. Newly-elected President Umaru Yar'Adua, a moderate and a respected governor from the northern state of Katsina, pledged publicly to make electoral reform, peace and security in the Niger Delta, and continued electoral reform his top priorities.

Much reform remains to be implemented, but the Yar'Adua administration has shown restraint in allowing the legislative and judicial branches to operate relatively free. In October 2007 Patricia Etteh, the Speaker of the Federal House of Representatives, resigned over allegations of corruption, after intense legislative and public pressure. Of significance for Nigeria's system of checks and balances and the rule of law, on November 12, 2008 an appeals court upheld a lower court ruling that approved an opposition party's gubernatorial election appeal, effectively unseating the ruling party's incumbent in favor of the opposition candidate. By a 4-3 vote, Nigeria’s Supreme Court on December 12 upheld the results of the presidential election and dismissed the appeals of the two other primary contenders.

Nigeria maintains an embassy in the United States at 3519 International Place, NW, Washington, DC 20008, (phone: 202-986-8400, fax: 202-362-6552, website: http://www.nigeriaembassyusa.org); and consulates general in New York at 575 Lexington Ave., New York, NY 10022 (phone: 212-850-2217), and in Atlanta at 8060 Roswell Road, Atlanta GA 30350 (phone: 770-394-6161).

ECONOMY

TradeNigeria is the United States' largest trading partner in sub-Saharan Africa, largely due to the high level of petroleum imports from Nigeria, which supply 11% of U.S. oil imports--nearly 46% of Nigeria's daily oil production. Nigeria is the fifth-largest exporter of oil to the United States. Two-way trade in 2008 was valued at more than $42 billion, an 18% increase over 2007 data. Led by machinery, wheat, and motor vehicles, U.S. goods exports to Nigeria in 2008 were worth more than $4 billion. In 2008, U.S. imports from Nigeria were over $38 billion, consisting predominantly of oil. However, rubber products, cocoa, gum arabic, cashews, coffee, and ginger constituted over $70 million of U.S. imports from Nigeria in 2007. The U.S. trade deficit with Nigeria was $21 billion in 2007. Nigeria is the 50th-largest export market for U.S. goods and the 14th-largest exporter of goods to the United States. The United States is Nigeria's largest trading partner after the United Kingdom. Although the trade balance overwhelmingly favors Nigeria, thanks to oil exports, a large portion of U.S. exports to Nigeria is believed to enter the country outside of the Nigerian Government's official statistics, due to importers seeking to avoid Nigeria's excessive tariffs.

The United States is the largest foreign investor in Nigeria. The stock of U.S. foreign direct investment (FDI) in Nigeria in 2006 was $339 million, down from $2 billion in 2004. U.S. FDI in Nigeria is concentrated largely in the petroleum/mining and wholesale trade sectors. Exxon-Mobil and Chevron are the two largest U.S. corporate players in offshore oil and gas production.

In March 2009, the United States and Nigeria met under the existing Trade and Investment Framework Agreement (TIFA) to advance the ongoing work program and to discuss improvements in Nigerian trade policies and market access. Among the topics discussed were cooperation in the World Trade Organization (WTO), market access, export diversification, intellectual property protection and enforcement, commercial issues, trade capacity building and technical assistance, infrastructure, and investment issues.

Dominated by OilThe oil boom of the 1970s led Nigeria to neglect its strong agricultural and light manufacturing bases in favor of an unhealthy dependence on crude oil. In 2002 oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue. New oil wealth, the concurrent decline of other economic sectors, and a lurch toward a statist economic model fueled massive migration to the cities and led to increasingly widespread poverty, especially in rural areas. A collapse of basic infrastructure and social services since the early 1980s accompanied this trend. By 2002 Nigeria's per capita income had plunged to about one-quarter of its mid-1970s high, below the level at independence. Along with the endemic malaise of Nigeria's non-oil sectors, the economy continues to witness massive growth of "informal sector" economic activities, estimated by some to be as high as 75% of the total economy.

Nigeria's proven oil reserves are estimated to be 36 billion barrels; natural gas reserves are well over 100 trillion cubic feet. Nigeria is a member of the Organization of Petroleum Exporting Countries (OPEC), and its current crude oil production averages around 1.6 million barrels per day. Poor corporate relations with indigenous communities, vandalism of oil infrastructure, severe ecological damage, and personal security problems throughout the Niger Delta oil-producing region continue to plague Nigeria's oil sector. In the absence of coherent government programs, the major multinational oil companies have launched their own community development programs. The Niger Delta Development Commission (NDDC) was created to help catalyze economic and social development in the region, but it is widely perceived to be ineffective and opaque. Oil accounts for 90% of Nigeria's exports and over 80% of government revenue. Significant exports of liquefied natural gas started in late 1999 and are slated to expand as Nigeria seeks to eliminate gas flaring by 2011.

Nigeria inspects all imports on arrival, rather than at ports of origin; as a result, about 95% of containers are physically examined. This procedure, along with Nigeria's uneven application of import and labeling regulations and poor infrastructure, complicates the movement of goods through Nigeria's notoriously congested ports and increases the cost of doing business. The government has promoted foreign investment and encouraged reforms in these and other areas, but the investment climate remains daunting to all but the most determined.

Agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, and the lack of basic infrastructure. Still, the sector accounts for about 30% of GDP and two-thirds of employment. Agriculture provides a big chunk of non-oil growth, which in 2006 reached 9%. Poultry and cocoa are just two areas where production is not keeping pace with domestic or international demand. Fisheries also have great potential, but are poorly managed. Most critical for the country's future, Nigeria's land tenure system does not encourage long-term investment in technology or modern production methods and does not inspire the availability of rural credit.

Oil dependency, and the allure it generated of great wealth through government contracts, spawned other economic distortions. The country's high propensity to import means roughly 80% of government expenditures is recycled into foreign exchange. Cheap consumer imports, resulting from a chronically overvalued Naira, coupled with excessively high domestic production costs due in part to erratic electricity and fuel supply, have pushed down industrial capacity utilization to less than 30%. Many more Nigerian factories would have closed except for relatively low labor costs (10%-15%). Domestic manufacturers, especially pharmaceuticals and textiles, have lost their ability to compete in traditional regional markets; however, there are signs that some manufacturers have begun to address their competitiveness.

Arguably Nigeria's biggest macroeconomic achievement has been the sharp reduction in its external debt, which declined from 36% of GDP in 2004 to less than 4% of GDP in 2007. In October 2005, the International Monetary Fund (IMF) approved its first ever Policy Support Instrument for Nigeria. In December 2005, the United States and seven other Paris Club nations signed debt reduction agreements with Nigeria for $18 billion in debt reduction, with the proviso that Nigeria pay back its remaining $12 billion in debt by March 2006. The United States was one of the smaller creditors, and received about $356 million from Nigeria in return for over $600 million of debt reduction. Merrill Lynch won the right to take on $509 million of Nigeria's promissory debt (accrued since 1984) to the "London Club" of private creditors. This arrangement saved Nigeria about $34 million over a simple prepayment of the notes. Nigeria faces intense pressure to accept multibillion dollar loans for railroads, power plants, roads, and other infrastructure. Expanded government spending also has led to upward pressure on consumer prices. However, the recent drop in world oil prices and the global financial crisis have prompted the federal government to tap its foreign exchange reserves, which consequently have decreased from $60 billion to $48 billion, in order to meet pressing budget demands from cash-strapped state and local governmental bodies.

One of Nigeria's greatest success stories has been the completion in early 2006 of a major overhaul of its banking system under aggressive Central Bank supervision. Reforms have reduced the number of banks from 89 to 24, increased a bank's minimal capital requirement to $190 million, and required banks to hold 40% of their deposits in liquid assets. Retail, corporate, and Internet banking are seen as intensively competitive, and the home loan market is considered moderately competitive. Less than 10% of lending is believed to be made to individuals. About 65% of the economically active population is serviced by the informal financial sector, e.g., microfinance institutions, moneylenders, friends, relatives, and credit unions. Since 1999, the Nigerian Stock Exchange has enjoyed strong performance, although equity as a means to foster corporate growth remains underutilized by Nigeria's private sector. Rural communities remain largely unbanked, the real estate sector and small businesses receive a low level of lending, and the credit card market remains at an early stage of development. However, Nigeria has not been immune to the global financial crisis and falling oil prices. The Naira has depreciated against the U.S. dollar by 25% since autumn 2008. The stock market also has lost 63% of its market value since March 2008. While none of Nigeria’s banks publicly have shown any signs of requiring intervention, they are cutting costs and credit terms, decreasing loans, and raising interest rates to address general liquidity concerns.

Nigeria's publicly owned transportation infrastructure is a major constraint to economic development. Principal ports are at Lagos (Apapa and Tin Can Island), Port Harcourt, and Calabar. Docking fees for freighters are among the highest in the world. Of the 80,500 kilometers (50,000 mi.) of roads, more than 15,000 kilometers (10,000 mi.) are officially paved, but many remain in poor shape. Extensive road repairs and new construction activities are gradually being implemented as state governments, in particular, spend their portions of enhanced government revenue allocations. The government implementation of 100% destination inspection of all goods entering Nigeria has resulted in long delays in clearing goods for importers and created new sources of corruption, since the ports lack adequate facilities to carry out the inspection. Four of Nigeria's airports--Lagos, Kano, Port Harcourt and Abuja--currently receive international flights. There are several domestic private Nigerian carriers, and air service among Nigeria's cities is generally dependable. The maintenance culture of Nigeria's domestic airlines is not up to international standards.

Gradual ReformNigeria has made progress toward establishing a market-based economy. In recent years, it privatized the only government-owned petrochemical company and sold its interest in eight oil service companies. The Yar'Adua administration has paid especially close attention to due process by overturning or reviewing a number of suspect contracts awarded by its predecessor. Nigeria's implementation of non-tariff barriers has been arbitrary and uneven and continues to violate WTO prohibitions against trade bans. However, Nigeria has made some progress in its implementation of the Economic Community of West African States (ECOWAS) Common External Tariff by removing some textile items from its list of prohibited imports in 2006. In a September 2008 breakthrough, Nigeria decreased the number of banned import categories from 44 to 26 items, reduced a number of tariffs, and reiterated its commitment to harmonizing its tariff regime with its neighbors. Enforcement of criminal penalties against intellectual property rights (IPR) violations is weak, and firms that are successfully countering IPR piracy have generally done so through civil court cases. The government has created an intellectual property commission. Rules concerning sanitary and phytosanitary standards, testing, and labeling are well defined, but bureaucratic hurdles slow trade opportunities. The government is generally supportive of biotechnology cooperation, although legislation governing biosafety is sparse at best.

A co-member of the International Advisory Group of the Extractive Industries Transparency Initiative (EITI) initiated by the G8, Nigeria's federal government is playing an important role in having volunteered to pilot the new disclosure and validation methodologies. It has completed a comprehensive audit of oil sector payments and government revenues from 1999-2004. The federal government has passed implementing legislation on public procurement and fiscal transparency, but now it must ensure that Nigeria's 36 states pass and implement similar bills. It is perceived that government contracting remains rife with corruption and kickbacks, and that many state and local officials continue to steal public monies outright.

Nigeria's economic team had enjoyed an excellent reputation in the international community. It produced an encouraging body of work, notably budgets described as "prudent and responsible" by the IMF and a detailed economic reform blueprint, the National Economic Empowerment and Development Strategy (NEEDS). Other positive developments included: (1) government efforts to deregulate fuel prices; (2) Nigeria's participation in the EITI and commitment to the G8 Anticorruption/Transparency Initiative; (3) creation of what had been an effective Economic and Financial Crimes Commission (EFCC), which until 2008 had earned 150 convictions and recovered over $5 billion in mishandled funds; and (4) development of several governmental offices to better monitor official revenues and expenditures.

Nigeria is not on track to meet its Millennium Development Goals because of a lack of policy coordination between the federal, state, and local governments, a lack of funding commitments at the state and local levels; and a lack of available staff to implement and monitor projects on health, poverty, and education.

Investment Although Nigeria must grapple with its decaying infrastructure and a poor regulatory environment, the country possesses many positive attributes for carefully targeted investment and will expand as both a regional and international market player. Profitable niche markets outside the energy sector, such as specialized telecommunication providers, have developed under the government's reform program. There is a growing Nigerian consensus that foreign investment is essential to realizing Nigeria's vast potential. Companies interested in long-term investment and joint ventures, especially those that use locally available raw materials, will find opportunities in the large national market. However, to improve prospects for success, potential investors must educate themselves extensively on local conditions and business practices, establish a local presence, and choose their partners carefully. The Nigerian Government is keenly aware that sustaining democratic principles, enhancing security for life and property, and rebuilding and maintaining infrastructure are necessary for the country to attract foreign investment.

DEFENSE Active duty personnel in the three Nigerian armed services total approximately 76,000. The Nigerian Army, the largest of the services, has about 60,000 personnel deployed in two mechanized infantry divisions, one composite division (airborne and amphibious), the Lagos Garrison Command (a division size unit), and the Abuja-based Brigade of Guards. It has demonstrated its capability to mobilize, deploy, and sustain battalions in support of peacekeeping operations in the former Yugoslavia, Angola, Rwanda, Sierra Leone, Liberia, and Sudan/Darfur. Nigeria currently has about 6,000 peacekeepers deployed in 12 UN missions worldwide. The Nigerian Navy (7,000) is equipped with frigates, fast attack, and coastal patrol boats. The Nigerian Air Force (9,000) flies transport, trainer, helicopter, and fighter aircraft, but most are currently not operational. Nigeria also has pursued a policy of developing domestic military production capabilities. Before the lifting of sanctions by many Western nations, Nigeria had turned to China, Russia, North Korea, and India for the purchase of military equipment and training.

FOREIGN RELATIONS Since independence, Nigerian foreign policy has been characterized by a focus on Africa and by attachment to several fundamental principles: African unity and independence; peaceful settlement of disputes; nonalignment and nonintentional interference in the internal affairs of other nations; and regional economic cooperation and development. In pursuing the goal of regional economic cooperation and development, Nigeria helped create the Economic Community of West African States (ECOWAS), which seeks to harmonize trade and investment practices for its 15 West African member countries and ultimately to achieve a full customs union. Over the past decade, Nigeria has played a pivotal role in the support of peace in Africa. It has provided the bulk of troops for the UN peacekeeping mission in Sierra Leone (UNAMSIL), the UN Mission in Liberia (UNMIL), and many of the troops to the African Union Mission in Sudan (AMIS). Nigeria is anticipated to do likewise in Somalia.

Nigeria has enjoyed generally good relations with its immediate neighbors. A longstanding border dispute with Cameroon over the potentially oil-rich Bakassi Peninsula was addressed by International Court of Justice (ICJ) in The Hague in 2002. The ICJ awarded most of the disputed Bakassi Peninsula and maritime rights to Cameroon, and the UN established a Mixed Commission on implementing the ICJ ruling. On June 12, 2006 Nigerian President Obasanjo and Cameroonian President Biya signed an agreement in New York on implementing the ICJ decision. Nigeria promptly withdrew its troops within 60 days. On August 14, 2008, Nigeria formally ceded Bakassi to Cameroon.

Nigeria is a member of the following international organizations: UN and many of its special and related agencies; World Trade Organization (WTO); International Monetary Fund (IMF); World Bank/IBRD; African Development Bank (AfDB); INTERPOL; Organization of Petroleum Exporting Countries (OPEC); Economic Community of West African States (ECOWAS); African Union (AU); Maritime Organization of West and Central Africa (MOWCA) and several other West African bodies; Commonwealth; Nonaligned Movement (NAM); and Organization of the Islamic Conference (OIC), among others.

U.S.-NIGERIAN RELATIONSSince the restoration of basic democracy in Nigeria in 1999, the bilateral relationship has continued to improve, and cooperation on many important foreign policy goals, such as regional peacekeeping, has been excellent.

The government has lent strong diplomatic support to U.S. Government counter-terrorism efforts in the aftermath of the September 11, 2001 terrorist attacks. The Government of Nigeria, in its official statements, has both condemned the terrorist attacks and supported military action against the Taliban and Al Qaida. Nigeria also has played a leading role in forging an anti-terrorism consensus among states in Sub-Saharan Africa. An estimated one million Nigerians and Nigerian Americans live, study, and work in the United States, while over 25,000 Americans live and work in Nigeria. President Yar'Adua visited President Bush at the White House on December 13, 2007. Secretary Clinton hosted a meeting with Foreign Minister Maduekwe on March 23, 2009.

U.S. Foreign Assistance PrioritiesDemocratic and economic progress in Nigeria is challenged by poor governance, entrenched corruption, internal conflict, ineffective service delivery, and pervasive poverty. Nigeria remains mired near the bottom of the United National Development Program (UNDP) human development index. While there has been notable progress in macroeconomic policy reform over the past few years, these reforms have yet to bring measurable improvements to the lives of the people. U.S. assistance is trying to help Nigeria address these challenges by fostering transparent and accountable governance; engaging civil society and government partners to battle corruption; increasing professionalism of the military and law enforcement agencies; strengthening health and education systems to deliver quality services; growing the non-oil economy; and improving the environment for regional and international trade. With national and local elections scheduled for mid-2011, efforts are also focused on creating an environment for transparent and credible elections.

Peace and Security: Prior decades of military rule had a negative effect on the professional development of the Nigerian armed forces. The Nigerian military is still in need of reform efforts to professionalize the officer and noncommissioned officer corps to include a focus on promoting effective civilian oversight and respect for human rights and the rule of law. U. S. assistance continues to provide equipment and training for Nigerian peacekeeping forces, which are deployed to peacekeeping missions throughout the continent. Funding assists in developing the capacity of government institutions and civil society to prevent, manage, and mitigate conflict. The U.S. program also builds Nigeria's capability to address threats to maritime security, including narcotics trafficking, and attempts to improve Nigeria's human rights record and enhance public trust in the security services.

Governing Justly and Democratically: U.S. funding advances the rule of law by strengthening the capacity and transparency of the justice system and building judicial independence at the federal level. Good governance and anti-corruption reform is enhanced by creating more responsive governance structures at the national and local levels, improving service delivery, and strengthening budget management capacity and fiscal oversight. The United States works directly with a diverse cross-section of Nigerian civil society organizations, building their internal management capacity and strengthening their ability to engage with the government on issues of fiscal accountability, budget monitoring, and extractive industries transparency. To lay the groundwork for credible elections in 2011, the United States will help to build local capacity in managing and coordinating elections infrastructure, and to promote civil society input into electoral and constitutional reform dialogue and oversight of the electoral process.

Investing in People: Helping Nigeria address the fundamental health and education needs of its citizens directly impacts governance, stability, and economic growth. Nigeria ranks 70 out of 71 countries in the 2008 Report on the State of the World's Mothers. The national average maternal mortality is about 800 per 100,000 live births, but the rate is at least three times higher in the northern states. Health-care consumers often opt to forego treatment, or to pay for treatment from unskilled providers. Almost one-third of women receive no antenatal care. Sixty-six percent of deliveries take place in the home, with only 35% assisted by trained health care personnel. The United States supports increased access to quality family planning and reproductive health services, focusing efforts in selected states with high unmet demand. Maternal and child health efforts target routine immunization, polio eradication, birth preparedness, and maternity services, seeking to reduce catastrophic rates of maternal and young child mortality. With Nigeria's child malaria mortality burden of over 300,000 preventable deaths per year, U.S. assistance increases access to proven preventive and curative interventions, including insecticide treated nets, net retreatment kits, and artemisinin combination therapy treatment for children and pregnant women. Nigeria has the largest tuberculosis (TB) burden in Africa. To reduce death and disability, especially in the vulnerable co-infected HIV/AIDS population, U.S. assistance aims to double the case detection rate and halve the incidence of TB over the next 10 years. Funding supports equitable access to quality basic education through teacher training, infrastructure improvement, and community involvement, focusing on public schools as well as Islamiyyah schools that provide both secular and religious education. U.S. assistance fosters higher education partnerships between American and Nigerian universities, focusing on institutions in the north. Through the President's Emergency Plan for AIDS Relief (PEPFAR), Nigeria receives significant support to build partnerships with the host country to provide integrated prevention, care, and treatment programs throughout the country and support orphans and vulnerable children. As a result, in 2007 the World Bank noted that HIV-positive seroprevalence rates decreased to 3.1%.

Economic Growth: Funding will build trade and investment capacity and improve the enabling environment for agriculture and microfinance. The United States will continue to implement activities under the Global Food Security Response that will accelerate the uptake of proven production, processing, and marketing technologies, significantly increase the productivity of selected staple food crops, foster agricultural value chain development, and stimulate job creation through the growth of agribusiness enterprises. Customs regulation and policy reform will enhance regional trade, transport linkages, and smooth supply to regional markets, ensuring adherence to international standards. U.S. assistance will also focus on expanding investment opportunities, which are hampered by limited access to market-driven commercial financial services, including microfinance. U.S. assistance will also help expand access to credit through partnerships with commercial banks and increased capacity of microfinance institutions. The U.S. will partner with Nigeria's Central Bank to improve the policy environment for micro-, small, and medium-sized enterprises.

Ongoing presidential initiatives with Nigeria include the African Growth and Competitiveness Initiative, fighting avian flu, the Initiative to End Hunger in Africa, and the Trans-Sahel Counter-Terrorism Program. Nigeria's eligibility for other regional activities include the Famine Early Warning System; Anti-Corruption Initiative; trafficking in persons; and the Ambassador's Girls Scholarship Fund. Nigeria is a premier participant in the President's Emergency Plan for AIDS Relief (PEPFAR), for which about $467 million was committed in FY 2008.

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